Experts believe that the European CBD market will grow as much as 400% between 2008 and 2023. But is it too late to hop on the bandwagon? Not at all! Although the industry is relatively new, substantial and swift growth has shown that this trend is certainly here to stay.
If you’re planning on getting involved, you will have some stiff competition though. Therefore, you will need to know your stuff if you’re going to compete. So, what do you need to know to set up a successful CBD business?
Know the law and marketing restrictions
Thanks to recent changes in legislation, we can now legally sell and consume cannabis-derived products, provided they comply with regulations. In order to run a successful business within the CBD space, you’ll need to research the laws and regulations, to make sure that you’re up to date with everything.
One of the most important regulations for CBD products is regarding THC content. Tetrahydrocannabidol (THC) is a psychoactive compound that is well-known for having an intoxicating effect on consumers. Because of this, it is considered to be a controlled substance.
This means that growers must ensure that their industrial hemp plants contain less than 0.2% THC, and manufacturers must ensure that finished CBD products contain less than 1 mg THC per product. This amount is considered far below the amount needed to have intoxicating effects.
You must also familiarize yourself with marketing regulations within the CBD space. Research into the potential uses and benefits of cannabidiol is in its infancy, and much more research is needed before we can conclusively determine whether CBD has any medicinal uses.
Therefore, manufacturers and distributors are not allowed to make medical claims in their marketing campaigns for their products. You cannot claim that your products can cure or treat any illnesses, medical conditions, or diseases.
To make sure that you’re abiding by advertising laws, you need to be careful how you word your marketing campaigns. You cannot suggest that your products are medicine or a suitable replacement for medication. You also cannot lead customers to content that suggests that your products can be used to treat illnesses.
It is also imperative that you display correct labelling on your products. Every item must clearly and accurately identify the CBD content per product, as well as all other ingredients.
Perfect your business plan
Regardless of the type of business that you’re starting, you must have a comprehensive business plan. This plan is a document that details the purpose of your business, information about your practices and processes, an estimation of income and expenses, along a brief idea of your marketing strategy.
This business plan will also contain the details of your brand mission and values.
It’s important to spend time and effort on your business plan so that it encompasses everything about your business that investors and partners will need to know. It will also act as a sort of roadmap for your future plans, as well as the day-to-day workings of the company.
A detailed business plan is also vital if you’re applying for loans or appealing to investors. It may sound a little overwhelming, but don’t worry, you don’t have to come up with this plan from thin air. There are plenty of templates and resources available here.
Sourcing CBD from a reputable supplier
There are many regulations and laws surrounding the sale and distribution of CBD products. Therefore, finding a reputable supplier is imperative.
To cultivate industrial hemp plants, you will need to acquire a special license, issued by the Home Office. To obtain this licence, your farm and workers will need to comply with high standards and strict regulations.
Cultivating hemp plants for extraction is not only time-consuming but can be costly. In addition, you will also need to establish a production facility. You can use this facility to develop formulas for your products as well as producing them. Again, this can be time-consuming and costly. Therefore, you may want to consider opting for white label or wholesale products.
White label and wholesale services
Opting for a white label programme means that you can order customized products from established manufacturers, without having to worry about sourcing CBD extract or formulating products. Working with white label services also mean that you can attach your own branding to the products. You can create your unique range of products.
When choosing your supplier, you should research your options thoroughly. Your supplier should be forthcoming with information about their productions. In particular, they should readily supply Certificates of Analysis (COAs) for each product. These reports provide evidence of third-party testing, as well as the details of the contents of the products.
They should also hold Novel Foods Applications for each item, as required by law. By opting for white label services, you can use this documentation for your products, instead of obtaining them yourself, which may be time-consuming and costly.
Researching reputable white-label suppliers can be overwhelming if you’re not familiar with the industry.
Therefore, it’s beneficial to work with companies that are well-established in the CBD space and have ample knowledge of the market, regulations, trends, and laws. For example, The Extract team have conducted extensive research into white label companies to compile their shortlist of reputable suppliers, known as CBD White Label Programme.
Get to know your products
To run a successful business in the CBD space, you will need to research the types of white-label or wholesale products available, and the types of products that your target market may want to buy. You should identify pain points for your target market and find products that can offer solutions to your potential customers.
As research into the potential uses and benefits of CBD is ongoing, you should also aim to stay up-to-date with the findings. To make sure your brand is successful against competitors, you need to stay on top of the game in terms of education and news in the industry.
Build your brand
Once you have identified your target market and decided on the items that you would like to stock, you will need to build your brand.
You will need to develop a clear identity that will be upheld across all of your products, platforms, and actions. You will need to decide on branding, typeface, a brand voice, and a colour scheme that will speak directly to your target audience.
This branding will need to be consistent across all product labels, websites and social media to make sure your brand is coherent and professional. Try to be as original as possible, so that your brand stands out against competitors and is memorable for your audience!
It’s not too late to hop on the CBD bandwagon – you just need to know what you’re doing to hold your own against competitors. This means perfecting your business plan, sourcing reliable suppliers, identifying your target audience, and building a professional brand.
The CBD industry is constantly evolving, and new research findings are becoming available. Therefore, it’s imperative that you know your products as well as staying up-to-date on education and news within the industry.
Growing hemp plants and developing your own formulas for products can be costly and time-consuming. Therefore, you should consider opting for wholesale or white label services that allow you to order ready-for-retail products. This allows you to spend more time and money on building your business.